ARTICLE: Leases for Telecommunication Equipment: Key Points for Landowners
Jasmine Keeble, Solicitor, Commercial Property
Telecommunications masts and other electronic communications equipment are often installed on landowners’ property under leases or ‘code agreements’ granted to operators.
This can provide an additional source of rental income; however, this arrangement may be subject to the Electronic Communications Code (“the Code”). It is essential that landowners understand the implications of agreements subject to the Code and, in particular, how they differ from more traditional commercial leases that landowners may be used to dealing with.
Does the Code apply?
The Code, contained within Schedule 3A to the Communications Act 2003, provides operators with significant statutory protections and rights, which can materially restrict a landowner’s ability to control the use, sharing, upgrading and removal of equipment installed on their land.
Whether a tenancy agreement is subject to the Code, the Landlord and Tenant Act 1954, or transitional provisions will vary depending on the nature, purpose, and legal status of the specific agreement being proposed. A revised Code came into force on 28 December 2017, and arrangements made before that date may be subject to transitional provisions, with different rules applying than landowners may have previously been used to.
Although many commercial terms remain negotiable, such as insurance, access, site boundaries, and payments, the parties cannot contract out of certain statutory rights and protections conferred by the Code. Any proposed restrictions must therefore be considered carefully against the relevant Code provisions.
Continuation and Termination
Where the Code applies, operators are granted statutory continuation rights. This enables the arrangement to continue past expiry of the contractual term until and unless it is ended on one of the grounds set out in the Code, or a new agreement is agreed between the parties or imposed by the court.
The Code requires that a minimum of 18 months’ notice be given by a landowner to terminate a code agreement and establish that one of the grounds set out in the Code applies. The process of terminating a tenancy subject to a Code agreement is complex, and landowners should seek specialist legal advice to assist them with this.
Assignment, Upgrading, and Sharing
Code agreements are also unusual in that the landowner’s ability to prevent or penalise an assignment is restricted., Subject to conditions set out in the Code, operators are also given statutory rights to upgrade apparatus and share the use of apparatus with other operators.
Payments and Valuation
The approach to calculating payments due under the Code differs from those seen within a more traditional commercial tenancy arrangement, with a ‘no network’ assumption being applied, which disregards any additional value related to the intended use of the land for networks.
Consideration for the Code arrangement and compensation for loss or damage are separate issues. Advice from a specialist surveyor or agent should be obtained in relation to valuation and commercial terms before heads of terms are agreed.
Importance of obtaining advice
If an agreement cannot be reached, an operator may be able to apply to the Court to ask for the rights contained in the Code to be imposed. Requests for access, draft terms, and formal notices being served should not be ignored.
Telecommunications agreements can provide useful income, but they may also confer extensive statutory rights that affect the landowner’s future control, use and redevelopment of the property.
If you are a landowner seeking to agree or renew a lease in respect of a telecommunications mast or equipment, you should seek early professional advice. This includes advice from a surveyor or agent specialising in Code agreements to assist with the negotiations of the initial terms, as well as seeking legal advice when entering into the lease.
Our Commercial Property Team have experience in this sector and are on hand to give advice. Call or email them:
